After years of financial stress, members of Dairy Farmers of America (DFA) have arrived at a "sweet spot" thanks to improved milk income margins in 2014, according to Rick Smith, DFA president and CEO.
Addressing approximately 1,400 delegates and guests at the organization's 16th annual meeting in Kansas City, March 18-19, Smith noted some farmers are still suffering from the drought or from balance sheets that might not be fully healed from previous years, but that current milk prices mean “It's nice to be in a sweet spot, and I hope enjoy it a bit. No matter how things are going, we have to work hard to do better; but I hope you can enjoy it, because you deserve it.”
At the same time, the co-op itself may have arrived at a "sweet spot” in 2014 after years of litigation, related costs and other challenges. Litigation charges negatively impacted the co-op's balance sheets, but net income and cash flow are forecast higher in 2014. DFA ended 2013 with strong operating results from its wholly owned commercial investments and increased earnings from affiliates.
DFA reported $12.83 billion in net sales in 2013, up $734 million (6%) from 2012 and just below the 2011 total of $12.97 billion. Adjusted net income was $61 million for 2013, compared to $83 million in 2012.
DFA paid farmers an average milk price of $20.15/cwt. in 2013, up $1.66 from the 2012 average of $18.49/cwt. and above the U.S. average all-milk price of $20.01/cwt. It was about 34¢ below the 2011 record-high of 2011.
DFA member milk marketings, like the U.S. overall, was basically unchanged from 2012, at 39.4 billion lbs. Total milk marketed by DFA and its affiliates totaled 60.6 billion lbs., down slightly from 2012, and represented about 30% of the nation's total. Payments to members for milk marketed were $7.9 billion in 2013, compared to $7.3 billion in 2012.
Returns to members in 2013 totaled $41.9 million, with $23.3 million distributed from the cooperative’s allocated patronage, and $18.6 million through DFA’s various capital retirement programs.
Earnings of affiliates were $72.8 million in 2013, compared to $57.6 million in 2012. Cash distributions from DFA affiliates totaled $38 million in 2013, compared to $36.4 million in 2012.
Smith characterized 2013 as a year of culminating stressors on a number of topics impacting dairy farmers, including weather, costs, balance sheets, and lack of confidence and certainty. Future dairy farmer income margins, he said, will be influenced by volatility regarding climate, global political instability, financial and economic conditions, and dairy product demand, requiring additional attention on risk management.